At last autumn's music industry powwow, the New York CMJ Music Marathon, one band's name was on everyone's lips - the Arcade Fire. Their gig was impossible to get into and, by all accounts, few left unchanged by the experience. Having released their debut album on a small independent label last year, the Montreal band quickly became the toast of the internet music blogs.

Their profile has risen so quickly since then that they are currently fighting off offers from major labels; recently, they duetted live with David Byrne on a Talking Heads song. It's easy to see their appeal. The orchestral rock five-piece sound like an inspired collision between Talking Heads, the Flaming Lips, the Polyphonic Spree and more besides, all cathartic violins and spirited yelping, courtesy of the Arcade Fire's main singer, Texan native Win Butler.

Indeed, those who struggle with wayward vocals will find Butler's adenoidal holler a little difficult to love. But it is worth the effort. Although the Arcade Fire tick all the right boxes to make them an indie sensation (obscure Canadian provenance - check; punkish attitude to their baroque chamber pop - check; uniform of Russian army shirts - check), their debut album is far more than a passing fancy.

It's called Funeral because three funerals (and one wedding) punctuated its recording period. As band members buried various aunts and grandparents, Win Butler married the band's co-vocalist Regine Chassagne, whose roots are Haitian. Underneath the furious tempos of the songs, you can hear the unmistakable creak of the wheel of life.

Funeral is decidedly not a record about those old rock chestnuts, boredom, romantic love or getting loaded (although boredom and romantic love do feature) but, rather, a vivid reminder to seize the day.

Curiously, much of the album is told from the point of view of children. In a suite of four songs called 'Neighbourhood', a snowstorm has paralysed the adult world and the children are living free, tunnelling under the snow, their skins growing thicker to withstand the cold. Gradually, they forget their parents and the names they were given. Sometimes, though, they remember what their parents' bedrooms looked like.

Sleep is fraught with danger here, a lie promulgated by adults. On 'Wake up', growing up is seen as inevitable but riddled with compromise. 'Our bodies get bigger but our hearts get torn up,' wails Butler.

As befits the band's Québecois home and Chassagne's island past, two songs are sung switching between French and English. Most movingly, Chassagne delivers 'Haiti', an elegy for a homeland she probably will never see.

The music matches this lyrical depth. 'Crown of Love' stands out as a relatively simple waltz about fading love (at least until the song switches into a disco stomp at the end).

More typically, though, 'Neighbourhood No 1 (Tunnels)' throws all the band's instruments at you at once in a frantic crescendo; 'Neighbourhood No 2 (Laika)' features a wheezing accordion and a tune that marries new-wave edge to a lush dynamic.

Of course, the edges are ragged and sometimes, the Arcade Fire don't know when to back off and let you marvel at their dexterity. But having a quavery voice never did the consolatory Flaming Lips much harm. And on this evidence, the Arcade Fire may well be the life-affirming musical choice of 2005.

­ To order Funeral for £10.99 with free UK p&p, call the Observer Music Service on 0870 836 0713